Gone But Not Forgotten: Court Limits Emotional Distress Recovery For Lost Personal Property

By Paul V. Esposito

We collect stuff. Lots of stuff. Whether we collect on purpose, or collect on impulse, we collect all the same. We’ve collected so much that now there’s a movement of minimalists urging us to rid ourselves of most of it. Maybe that’s a good thing, maybe not—you be the judge.

Getting rid of stuff can be difficult. What can be even worse is when someone steals or damages it. That can create certain feelings, none of them good. Are those bad feelings for the loss of personal property compensable? The Montana Supreme Court recently provided its answer. Childress v. Costco Whsle. Corp., 2021 Mont. LEXIS 639.

Facts

Randall and Claudia Childress took their vehicle to a Costco tire center for routine work. With the work completed, a Costco employee turned over the keys—except not to the Childresses. A man posing as their son drove away with the vehicle. The Childresses later found it, but not so its contents, including a handgun and ammunition, documents containing their home address, and the keys to their home.

After Costco denied liability, the Childresses sued it in federal court for negligent infliction of emotional distress, bailment, and negligence. They proceeded to trial on the latter two theories. Randall, a Vietnam vet, suffered from PTSD that he thought was behind him. But the theft aggravated his condition, “causing him stress, paranoia, sleeplessness, fear, adverse appetite, irritability, anger, lack of intimacy, and anxiety for which Randall received 17 treatments.” Claudia suffered from “stress, sleeplessness, fear, and nightmares” because of the theft.

Costco moved to bar emotional distress damages, arguing that Montana law disallows them as “parasitic” to (an element of) claims of loss of personal property. But the district court allowed recovery for past and future mental, physical and emotional pain and suffering. A jury awarded over $62,000 in “unspecified, non-property damages” on the Childresses’ negligence claims. On appeal, the Ninth Circuit asked Montana’s high court to decide whether state law allows emotional distress damages for personal property loss or damage.

Analysis

Surveying the law, the Montana Supreme Court answered “no.” In Montana, a claim for emotional distress foreseeably arising out of negligent or intentional conduct exists when the distress is so severe that no reasonable person could bear it. A few other claims allow for emotional-distress parasitic damages without proof of the heightened standard applied to a stand-alone claim. They involve: (1) disrupting the quiet use and enjoyment of real property, (2) discrimination and civil rights violations, (3) bad faith and insurance fraud under the state unfair trade practices statute, and (4) wrongful death. The Court recognized the “nearly universal” bar against emotional injury damages when a loss is purely economic. Concerns over fraudulent claims, a flood of litigation, and virtually unlimited liability support the prohibition.

Interestingly, the Court had earlier carved out an exception to the no-damages rule for the loss of use and enjoyment of real property. A realtor sold a parcel that had been committed to adjacent landowners. The Court reasoned that real property is unique, and the landowners had developed “a subjective relationship with the property on a ‘personal identity’ level.” They had plans to build their retirement home on the land.

That “subjective relationship/personal identity” analysis became for the Court the critical distinction between real property and the Childresses’ property. The Childresses lost a handgun, ammunition, a house key, and documents containing their home address. Those were fungible items valuable because of their utility, not heirlooms having intrinsic value intertwined with the family dynamic. So although the Court had never explicitly barred parasitic emotional distress damages for property loss, it refused to award them here.

Learning Point: Childress is probably not the end of the story as to the award of emotional-distress damages for personal property loss or damage. The Childresses waived an argument that the damages to the enjoyment of their home qualified their loss for real-property treatment.

On a broader level, Childress does not seem to foreclose all parasitic damages for personal property losses. What about the theft of a great-grandmother’s wedding ring lovingly passed down through the generations? Or a car accident that negligently killed a family dog treated as a family member? The decision appears to leave wiggle room for those losses.

Whether from Montana or elsewhere, expect to hear more about emotional distress damages for personal property loss.